Russian Finance Ministry Gives Gloomy 2015 Forecast

Russia Finance Ministry officials have announced a series of measures that they say the country needs to take as they delivered sobering news about the state of Russia's economy.

Deputy Finance Minister Tatyana Nesterenko said the government plans to ask the State Duma, the lower house of parliament, to allow the spending of an extra 2.7 trillion rubles (some $44.26 billion) from the budget's reserve fund in addition to the 500 billion rubles already requested.

The Finance Ministry later corrected the figure Nesterenko provided and said the additional amount needed would be 3.1 trillion rubles, bringing the total amount of the fund required from the reserve fund to 3.6 trillion rubles (some $58 billion).

Finance Minister Anton Siluanov appeared on the Rossia 24 television channel confirming the need for the extra funds.

Nesterenko also said the ministry projected a budget deficit of 3.7 percent of gross domestic product for 2015, far higher than the 0.6 percent originally forecast.

She said the Finance Ministry planned to cut budget spending by some 1.07 trillion rubles (approximately $17.5 billion) but added she believed larger cuts were needed.

Nesterenko said that if the worst-case scenario happens to the Russian economy, and she did not go into details, the reserve fund could shrink as low as 1 trillion rubles by the end of 2015, which would represent an 80 percent reduction in the fund.

She also said Russia no longer plans to issue some $7 billion in eurobonds in 2015.

The Russian president's spokesman, Dmitry Peskov, announced on February 27 that the salaries of members of the presidential administration would be cut by 10 percent.

The precipitous fall in the price of oil, one of Russia's major exports, coupled with sanctions that the United States and European Union have imposed on Russia for the unrecognized annexation of Ukraine's Crimean Peninsula, and the Kremlin's continued role in supporting separatists in eastern Ukraine have sent Russia's economy into a downward spiral.